Norwegian Cruise Line Reports Q1 2022 Earnings, $1.0 Billion Loss

Norwegian Escape

Norwegian Cruise Line Holdings today reported financial results for the first quarter ended March 31, 2022 and provided a business update.

“Last week we reached the biggest milestone yet in our Great Cruise Comeback as Norwegian Spirit, the last ship in our fleet to resume sailing, welcomed guests on board in Papeete, Tahiti. The herculean effort to restart our fleet would not have been possible without the incredible fortitude of the entire Norwegian team and the unwavering support of our key partners and stakeholders around the world,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings.

“Looking ahead, our strategy is to ramp up occupancy in a disciplined manner with the goal of exceeding historical Net Yield levels for full year 2023 while maintaining the high guest satisfaction scores and strong onboard revenue generation we are currently experiencing,” he continued. “We are encouraged that consumer demand remains robust with net booking volumes not only back to pre-Omicron levels but now approaching historical levels despite a temporary retreat due to the Russia-Ukraine conflict. Pricing remains very strong for all future periods and our value-add bundling strategy is working better than ever.”

The company completed its phased fleet relaunch on May 7, 2022 and its entire 28-ship fleet is now back in operation. This significant achievement marks the completion of a nearly 10-month long process to return ships to service which began with Norwegian Jade in July 2021, the company said in a press release. 

By the end of the first quarter of 2022 the company had 85% of its capacity operating. Occupancy in the first quarter of 2022 was 48% primarily reflecting the impact of Omicron which caused operational challenges and disruptions, including additional travel restrictions, increased health-related protocols and certain port closures. During the surge, the company continued to follow its core go-to-market strategy and did not discount-to-fill in order to boost near-term load factors, according to a press release. 

As the booking impacts of Omicron and the conflict in Ukraine have faded, net booking volumes and occupancy levels have sequentially increased each month. Despite these challenges, strong ticket pricing and onboard revenue drove positive cash contribution from the fleet that operated in the quarter.

The Russia-Ukraine conflict resulted in the cancellation or modification of approximately 60 sailings in 2022, which included all voyages with calls to ports in Russia. Three ships were redeployed as a result of the conflict including Norwegian Getaway to Port Canaveral, Oceania Cruises’ Marina to the British Isles and Regent’s Seven Seas Splendor to Northern Europe. In addition, the company has also removed all calls to ports in Russia from its itineraries in 2023.

The company reached a significant financial inflection point in March with Operating Cash Flow turning slightly positive. The company also expects Operating Cash Flow to be positive for the second quarter of 2022.

Booking Environment and Outlook

The quarter began with net bookings, particularly for close-in voyages, negatively impacted by the Omicron surge, which began to improve in mid-January. This momentum was temporarily disrupted as the company experienced elevated cancellations, primarily for itineraries in the Baltic region, in the immediate weeks following the start of the Russia-Ukraine conflict.

However, this impact was short-lived and net booking volumes have since shown sequential improvement, not only rebounding back to pre-Omicron levels but also now approaching the booking pace needed to consistently sail at historical load factor levels.

As a result of the temporary setbacks from Omicron and the Russia-Ukraine conflict, the company’s current cumulative booked position for the second half of 2022 is below the comparable 2019 period but at meaningfully higher pricing even when including the dilutive impact of future cruise credits (“FCCs”).

The booked position improves throughout the year with the fourth quarter of 2022 in line with the comparable 2019 period and at meaningfully higher prices. Booking trends for 2023 continue to be positive with both booked position and pricing significantly higher and at record levels when compared to bookings for 2019 and pre-pandemic 2020 at a comparable point in the booking curve.

The company’s advance ticket sales balance, including the long-term portion, increased $418 million in the quarter to $2.2 billion as of March 31, 2022. This includes approximately $0.6 billion of FCCs or 27% of the total deposit balance. Gross advance ticket sales build was approximately $1.1 billion during the quarter, the highest level since the start of the pandemic.

Liquidity, Cash Burn and Financial Recovery Plan

The company continues to take proactive measures to enhance liquidity and financial flexibility in the current environment and optimize its balance sheet. As of March 31, 2022, the company’s total debt position was $13.6 billion and the company’s liquidity was $3.1 billion, consisting of cash and cash equivalents and a $1 billion commitment available through August 15, 2022.

As part of its financial recovery plan, the company raised approximately $2.1 billion through a series of debt transactions in February 2022 to further optimize its balance sheet. The proceeds from these transactions were used to redeem all outstanding 12.25% senior secured notes due 2024 and 10.25% senior secured notes due 2026, with the balance of the proceeds expected to be used to make scheduled principal payments on debt maturing in 2022, including any accrued and unpaid interest thereon, as well as related premiums, fees and expenses, in each case. In addition, in connection with these transactions, debt maturities were extended and certain collateral and guarantees were released.

The company’s monthly average cash burn for the first quarter of 2022 was approximately $375 million2, below the prior estimate of approximately $390 million. This cash burn rate does not include cash inflows from bookings or contribution from ships that re-entered service. Beginning in April 2022, the company resumed debt amortization payments which were deferred during the pandemic.

“I am incredibly proud of the significant progress we have made to-date in our operational and financial recovery, demonstrating our company’s resilience as we navigate the evolving public health environment and geopolitical conflicts,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “With our entire fleet now back in revenue service we reached a critical milestone, which we believe will result in positive Operating Cash Flow for the second quarter. We are focused on building on this recovery momentum and gearing up to deliver on our industry-leading growth profile through 2027, representing 50% capacity growth versus 2019, beginning with the incredible, first in its class, Norwegian Prima this summer.”

First Quarter 2022 Results

GAAP net loss was $(1.0) billion or EPS of $(2.35) compared to net loss of $(1.4) billion or EPS of $(4.16) in the prior year. The company reported Adjusted Net Loss of $(760.5) million or Adjusted EPS of $(1.82) in 2022. This compares to Adjusted Net Loss and Adjusted EPS of $(668.6) million and $(2.03), respectively, in 2021.

Revenue increased to $521.9 million compared to $3.1 million in 2021 due to the resumption of cruise voyages.

Total cruise operating expense increased 266.1% in 2022 compared to 2021, primarily due to the resumption of cruise voyages. The increase in 2022 reflects higher payroll, fuel, and direct variable costs of fully operating ships. Cost for certain items such as food, fuel and logistics also increased due to inflation. Additionally, in 2022, there was an increase in repair and maintenance costs, including planned Dry-docks.

Fuel price per metric ton, net of hedges, increased to $724 from $590 in 2021. The company reported fuel expense of $135.5 million in the period.

Interest expense, net was $327.7 million in 2022 compared to $824.4 million in 2021. The decrease in interest expense reflects lower losses from extinguishment of debt and debt modification costs, which were $188 million in 2022 compared to $674 million in 2021. The decrease in interest expense also reflects lower interest expense in connection with the recent refinancings, partially offset by higher debt balances and higher LIBOR rates.

Other income (expense), net was income of $38.1 million in 2022 compared to $27.2 million in 2021. In 2022 and 2021, the income primarily related to gains on certain fuel swaps and foreign currency exchange.


As a result of the COVID-19 pandemic, most recently fueled by the Omicron variant and the effects of the Russia-Ukraine conflict, while the company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the second quarter of 2022. The company does not provide estimated future results on a GAAP basis because the company is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of certain gains and charges. These items are uncertain and will depend on several factors, including industry conditions, and could be material to the company’s results computed in accordance with GAAP.

The following reflects the company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.

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